"Freedom is not a gift bestowed upon us by other men, but a right that belongs to us by the laws of God and nature ... Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote."
--Benjamin Franklin

Thursday, September 1, 2011

Introduction

Introductions to blogs or other written works tend to be limiting. One states a thesis or theses that will be explored and then from that point on, any exploration in any other direction, no matter how worthwhile in its own right, is deemed a tangent.

But one has to start somewhere.

I decided to begin this blog after a brief period of subscribing to the New York Times. I requested a subscription as a Christmas gift last year, in part because I wanted the arts and weekend sections and in part because I wanted to see if anything had changed in the reporting about political and economic issues. Nothing had: the paper had continued in its strain of political thought and had continued to report on economics as if it were part of politics, rather than a scientific discipline that had been corrupted by politics – indeed, the reporting I read was a continuation of this corruption.

Although readership of this, the quintessential example of “progressive,” Keynesian, 1950s-1960s-era thought, has declined over the last generation, it is still published, daily, and the ideas – political ideas that are contradictory and immoral, and economic ideas spawned by people like Malthus and Keynes which outside the political world are as discredited as bloodletting is in the medical sciences – are still published. Most of the editorials amount to lies wrapped in poor analysis, layered with divisive politics, topped off with mischaracterizations and character assassinations of anyone who reaches a different conclusion. It holds itself out as the “paper of record” for this errant thought. It begs for an answer.

There are several answers, and at times, when someone clearly says it better, I will simply post a link. So occasionally this blog will simply refer to http://www.mises.org/, or Forbes, or the Wall Street Journal, or John Stossel, or some other source.

But this is no clearinghouse.

It is also not merely a response, not merely a negative, but a series of affirmative statements.

My first affirmative statement will be this: that economics is, contrary to popular belief, not inherently political, but rather has been corrupted by politics. My second, to be explored simultaneously, is that the natural state of affairs, the state in which economics can be studied and in which the choices that are then studied are allowed to be made, is not a subjective goal but is simply the proper state, in an objective sense. These two statements are interrelated.

Economics is economics – “political” economics is only an attempt to corrupt it. Political economics is to economics what alchemy is to metallurgy. The only difference is that alchemists did not (as far as I know) claim that their critics in the field of metallurgy were actually “anti-gold.”

Economics is just economics. It is a science – with laws and theories like any other science. And like any other science, its laws cannot be broken. This does not involve a value judgment – only facts, logically assembled to form an argument. For example – one Sunday per month I like to run down First Avenue to the QueensboroBridge, run across it to Queens and then return and run back up First Avenue to the Upper East Side. If one month while crossing the bridge I were to climb the fence and jump off, what would happen? A physics professor would tell you that I would land in the East River, or possibly on Roosevelt Island, and a biology professor would point out that in either case I would likely die. There is no value judgment here – nobody is claiming that I should die, only that I would, if I took that action. If Congress passed a bill outlawing gravity, and the physics professor explained that it wouldn’t work and thus shouldn’t be passed, no rational person would attempt to argue that the physics professor simply wanted me to die. Yet when someone points out the economic fallacy behind some of the bills that Congress considers, he often finds himself on the receiving end of this same line of reasoning. Why is this? It is because economics is not taught in most secondary schools, and it is because economics has been corrupted by politics – the combined effect of which is that most people do not knowingly consider economics apart from politics, apart from this corruption – because politics is subjective, most people accept the fallacy that this renders economics subjective.

Politicians determine economic policy, and often get it wrong. Political pundits often critique or expound upon economic policy, and often get it wrong. Sometimes they deliberately get it wrong. Sometimes they are just misinformed or misguided.

That their motives are political does not render economics political, and thereby subjective, and does not render their mistakes “differences of opinion.” If one for political reasons simply decides not to believe in any other scientific law or in an extremely widely-held theory in another area of science, that does not mean that one who points out the error is himself engaging in a political debate, or that he has political motives. For example, if a politician on the political “right” were to decide, not with any basis or explanation, but simply to prove his “faith” to the “religious” wing of his party, to state his disbelief in Darwin’s theory of natural selection, and I were to post in this blog that that politician is almost surely mistaken, and to include a summary of Darwin’s theory, that would not make me a “leftist” or “liberal” and it would not render my post “political.” Most readers would agree with me on that point. But this next example should be equally understood: if someone on the political “left” were to recommend an increase in the minimum wage to, say, $15/hour, and I were to post a response explaining the economic law that price floors (if set at material levels) cause surpluses, i.e., that the result for the typical employee presently making $9/hour would not be a raise but rather would be unemployment (or a sharp cutting back of his hours, even if his name were to remain on the payroll), that would not make me a “conservative” and it would not render my post “political.”

Similarly (and more on this later), it would not be a value judgment on my part that the person “doesn’t deserve to make more than $9/hour.” It would merely be an observation that that is the value that the market – the aggregate of consumers (which includes the employee himself) – assigns, along with the mathematical determination of the effect of the proposed interference with the market’s value judgment.

This example involves an element beyond the “gravity” example above – in that example, the bill would have no effect. In this one, the bill will, if passed, have an effect almost opposite to the one that the bill’s proponents claim to desire. In critiquing such measures, the tone of my posts may become sharper, but again I am not making or imposing a judgment – simply opposing the imposition of a value judgment, while also noting the futility of those who seek to impose one (or the sheer cynicism of those who do know that the result will be increased unemployment but who want to increase dependence on the political class and who realize that the people affected won't understand what has happened). We will develop this thought further below.

There may, as in other sciences, be areas in which there are two, possibly three, maybe even four or five, viable theories on a particular topic (the effect of price controls is not one of them) – but there are not as many as one would think, and it also is not to say that one may simply “believe whatever one wants.” It is NOT like politics, it is NOT like religion; rather it is a lot more like biology or chemistry.

Let me write that again – economics, the study of human action, of purposeful action – is a science, like biology, not a subjective, value-driven area of thought like politics or religion. Why? Because economics objectively studies the choice itself – economics does not place relative value judgments on the choices made. Economics merely recognizes that the individual making the choice makes such a value judgment, but does not seek to superimpose the student’s or teacher’s value judgment onto the choice.

For example, a woman goes on-line and pays 99 cents to download a song: “Bad Romance” by Lady Gaga. To state that she should have downloaded “Gimme Shelter” by the Rolling Stones is subjective; to state that she should save her money for a rainy day is also subjective; to state that it is “unfair” that Lady Gaga (or Mick Jagger, for that matter) makes millions of dollars per year simply gyrating and singing while teachers make far less, or while millions of children go to bed hungry each night, is subjective. The only objective statement is that the woman has made a choice – and that millions of people have made a similar choice, which is why the macroeconomic results are what they are. Economics is a science and thus it differs from politics in precisely this way: the lack of a value judgment – the fact that the economist is not concerned with forcing the woman to buy “Gimme Shelter” or to save the 99 cents or to donate the 99 cents or in any other way to override her choice. The economist simply observes and studies the choice itself, and the interaction of that choice with all others.

And one of the first things observed by the economist is that the choice itself, and its interaction with all other choices (absent imposition) is the natural order of things. This again is not a value judgment. A value judgment would attempt to argue that somehow the “world is a better place” in some objective sense when the woman chooses to buy the Lady Gaga song. We, the objective, make no such argument – we merely observe that what is and is not “better” is not an objective question at all: that it is, in fact, by definition, subjective, arbitrary – in the eye of the beholder – and thus it is properly decided for and by only that woman who happens to have chosen to buy the song. Since what is and is not a “better world” is arbitrary, is a matter of individual belief, the only possible objective definition of a “better world” is that world in which each individual is allowed to pursue his or her own arbitrarily-defined “better world.”

Anything else – all else – is the imposition of some people’s value judgments on others. We do no such thing: one cannot impose a lack of imposition. Thus, those who seek to prevent the imposition of value judgments are not mere rivals to the various factions who, for different reasons, seek to impose rival sets of values. Those factions recognize this, which is why they often couch their arguments in our language, and which is why they often argue for specific freedoms or choices and against others, as if every choice were not from among all possible alternatives, as if choice could be broken up into discreet sections, when what they are really saying is that “one should be free to do as one wants, as long as one chooses from among the options I think are acceptable” (call it contradiction or call it hypocrisy, several examples will be addressed in this blog).

Economics as a science has been falsely accused of being political, of being subjective, of applying (and thus being used to justify the imposition of) value judgments. Its accusers have dreamed up their own perverted versions of economics in order to justify application and imposition of value judgments, under various names – statists, collectivists, nationalists, socialists, national socialists, progressives, etc… (there is always some supposed ‘common good’ that supposedly justifies their imposition – it is never for themselves).

We have seen the fallacy in the argument that the attempt to go back to being apolitical, scientific, objective, is equally political simply because it validates the choices that happen to have been made. The argument that opposing their imposition of a value judgment is itself a value judgment or manifestation thereof has been exposed for the sophistry that it is.

Then they tweak the argument (only slightly, and without improving it) to what would appear to address their primary concern – they argue that the lack of imposition is itself an imposition because it adversely affects what they are trying to do. They tell us that allowing the woman to buy her Lady Gaga song without interference, without taking at least SOME of her 99 cents and doing what we think ought to be done with the entire 99 cents, is itself a value judgment, or the application or imposition of same – on the new ground that whoever would have benefited from that theft is himself being stolen from by virtue of our opposing it. They might as well argue that by foiling an attempted rape we deprive some lonely man of a good lay (they might even call us “the party of ‘no’”).

Of course, if it is an attempted gang rape that you foil, and you live in a democracy, you have to contend with the fact that the attempted rapists outnumber the victims. But logic is not up for a vote; objectivity is not up for a vote: rape is rape, and those who foil it are not to be equated with those who attempt it, whatever the numbers, whatever their reasons for attempting it, and whoever would benefit from their achieving it. They are each imposing a value judgment and we are protecting against imposition. We are not the same. We are not mere “opponents” in the same arena. We are right and they are wrong, and numbers do not change this.

You will notice I have not yet used the word “libertarian” – and with good reason: “libertarian” is simply one who seeks “liberty,” and “liberty” is nothing more than the absence of imposition. It is thus is not merely a rival political philosophy to the various sets of values that people seek to impose. It is not a value judgment in itself – it is not a judgment positive or negative as to the woman’s choice of what to do with her 99 cents, just a recognition that it is her choice to make. One cannot equate that recognition with any of the various beliefs as to the limits that should be placed on what she does with it, or how much of it some authority should simply take to use as it sees fit (not that there is any qualitative difference between limits and confiscation – there is not). Politics accepts this thuggery, and political beliefs simply differ as to what ends someone else’s 99 cents should be diverted, and the most efficient means of doing so. We are not political. We are anti-political. A-political. We recognize choice, we study choice, we attempt to protect choice, not override it. Our statement is not simply a rival political thesis. We are above politics. We defend against politics.

Likewise there is no such thing as “libertarian economics” – economics is, as discussed above and below, just economics, and what others call “libertarianism” is merely the natural order in which we study economics, in which the choices that we study are allowed to be made. It is not that Keynes is a “progressive” economist and Mises and Hayek were “libertarian” economists – Mises and Hayek were economists. Keynes was a political hijacker of economics. What Keynes attempted with economics was in line with what alchemists attempted with metallurgy – suspension, or the attempted manipulation, of scientific law to achieve some predetermined end, some alleged “social good.” It was wrong. It would have been wrong even if it had somehow worked. And it did not work. And it is arguable that it was not supposed to work - that Keynes had a good gig going and simply attempted to give his supporters in politics an intellectual theory to justify what they already wanted to do to increase their own power and gain: in essence, buy votes with other people's money.

But we have gotten ahead of ourselves.

That the supposed “social good” in question is in fact often better served in a state of liberty – that the imposition of value judgments often has the opposite of the effect that the imposers claim to desire, is sometimes a more interesting academic question, certainly a more quantitative question, but can also be a distraction. The fact that the state of liberty often is more conducive to the production of the supposed “common good” than the altered state of imposition of value judgments is curious and, as will be addressed below, serves as a launching point from which we can consider whether any presupposed “common good” that is in fact disserved by a given imposition is the true motive of those who seek to impose. But this is not the primary base of argument against the imposition of values. This is because what is and is not the alleged “common good” is in flux, as it is not universally defined, because it is, as we have pointed out, subjective. Thus this is a useful argument only at one time, with respect to one person who claims to desire one particular “common good,” and if we relied primarily on that argument we would become better alchemists, but no longer remain metallurgists – we would become more efficient politicians than they but would no longer remain economists.

What makes economics economics – an objective science – is precisely the lack of any subjective value judgment. The 99 cents belongs to Lady Gaga not because we the observers judge that Lady Gaga is worthy of it – but simply because the woman voluntarily downloaded her song and paid for it; the 99 cents belonged to the woman because her employer voluntarily paid it to her; it belonged to her employer because someone voluntarily paid it to her employer for whatever good or service the employer produced, and so on. Not because in any “moral” sense any of these parties “should” have received it, or because the world is “a better place” because of this particular chain of custody of the 99 cents, but simply because it resulted from choice – from the lack of imposition.

Just as, if I make X, X is mine, and if you make Y, Y is yours, if give you X in voluntary exchange for Y, X is now yours and Y is now mine.

They realize this. And deep inside, they even agree with it, or at least realize that most people do. That is why they not only use our language, but give you only half of the story. They may soon tell you that big bad Food Emporium will have laid off some of its employees (thus somehow depriving them of ‘freedom’) and that “something must be done” to “correct” the “problem” – the rest of the story is that consumers in the Upper East Side have flocked to the new Fairway (which by the way has likely hired as many employees as Food Emporium will have shed) and that the two firms are simply conduits by which the consumers’ judgment was rendered. It is easier to make it look like something terrible has happened when you look at half the picture and place ‘blame’ on some big, impersonal entity, pretending that the market is anything other than the aggregate of the consumers’ choices, and also pretending that it does not balance out. They tell you half the story to mask the fact that the end result for some subgroup was caused by the choices made by everyone, including the subgroup itself. Their attempt to remove the choice from the study of the outcome reveals their realization that most people, once they understand that the outcome is the result of those choices, would not support the imposition of a different outcome. The only true way to reverse course is to force everyone to switch back to Food Emporium, which almost nobody would support.

Economics is not inherently political – quite the opposite. But economic policy is subject to change, is determined by government, subject to an ever-decreasing set of long-term standards (the most important of which was lost 40 years ago) and thus it is set by the whim of politicians. Politicians have attempted to kidnap economics, to pervert it, and render the objective subjective. Keynes told the machine politicians that increasing the level at which they override choice – in effect, the level at which they buy votes with stolen money – was exactly what the economy needed. We will attempt to correct the record, to clear the name of the falsely-accused discipline, to once again distinguish economics from politics, the objective from the subjective, the absence of imposition of value judgments from the various sets of judgments that some seek to impose. It is ridiculous to have to point out that the guard dog is distinct from the various burglars who define themselves based upon the different ideas as to how they will spend the money they steal. But we have done so – and now we can move on to the next matter.

What is even more ridiculous is that we must also address the thieves’ problems with simple math. We have already distinguished between allowing the woman to buy the Lady Gaga song and taking the money to spend it on something “more worthwhile” as if that could be defined objectively. Surely even those who argue that their proposed expenditure of her 99 cents is “better” than what she would have done with it would agree that is still a substitution not only of their judgment for hers but of their transaction for hers – surely they would not dispute that there is no net change in the number of transactions or the amount transacted, right?

Wrong. Some of the thieves will actually claim that somehow, when they take the woman’s 99 cents and spend it in some other manner, this boosts economic activity in the aggregate, and use that as a justification for their theft and redistribution. Somehow, we are supposed to forget that she was about to buy the Lady Gaga song in the first place – or invest it or deposit the money into her savings account (to be loaned out to fund some production or consumption), or do something, anything, with the 99 cents; either that or we are to believe that she was about to withdraw the 99 cents from her account, walk down to my running route and toss her 99 cents into the East River.

Ridiculous – right? But that is the only logic by which “spending is stimulus” and by which there can be such a thing as a “jobs program.” To argue that the public sector growth at the expense of the private sector is “better” may appeal to a heart over a mind – to argue that the public sector growth adds to the combined economy is to argue that one minus one equals one.

But that is how it is when one replaces the objective with the subjective – once one has let go of reality, facts, logic, there is no end to it.

That only makes the case against the imposition of value judgments so much easier to make. In many instances it is not a matter of two “sides” dealing with the same facts but applying different values – or, one side attempting to impose a value judgment while the other side attempts to allow free actors to make their own value judgments for themselves. It is simply a matter of correcting some flaw of logic, or correcting the factual record itself. Another example would be insisting upon comparing poverty statistics net of the effects of immigration (i.e., if from one decade to the next the number of poor people in the US increases by 1.5 million, and it is also the case that during the same decade 3.5 million poor people entered the US and stayed, that means that, net of immigration – which is the better measure of the effect of domestic economic policy on poverty – 2 million people escaped poverty, even before considering population growth from reproduction).

There will be times when a reader’s value judgment is so strong that he finds an excuse to support imposing it, regardless of the case for the lack of imposition – when the subjective appears so compelling as to be thought of as objective (e.g., nobody wants to see people starve). But the math, once one has unearthed it, is often well beyond any debate. One simply has to unearth it.

And thus arises the final indictment of the imposition of values – if, as is often the case, a simple examination of the math shows that the overriding of choice actually makes the supposedly sought-after, supposedly better, result less likely, and the people who seek to override choice are not stupid, then they must know better - they must know that they argue falsely. In this case, then it must be that their true motive for overriding choice is not even what they claim it to be. In this case, their appeal is not to the heart, but to their own self-interest, with the only difference between theirs and ours being that theirs would be served at others’ expense.

Imposition – the overriding of choice – then, is not a “necessary evil.” It is just evil. There is nothing “necessary” about it.